Gamestop just announced a bid to buy eBay, which sounds like a bad idea on just about every front you can imagine.
GameStop–no longer a serious company–currently owns around 5% of eBay through share purchases, but has now submitted a deal where it would pay 50% cash and 50% GameStop shares to buy the global auction and trading website for a total of $56 billion.
Were eBay to accept the offer (and there’s absolutely nothing compelling them to), Gametop’s proposal includes leveraging the games retailer’s physical shopfronts to perform the authentication services eBay currently offers on stuff like trading cards, which raises so many questions about expertise and market monopolisation that I don't have space for them here.
It also mentions that one big benefit of the acquisition for investors is that eBay would no longer need its own administration support, as “finance, HR, real estate, legal, IT, and professional services across the combined company” would all be consolidated. In other words, that would result in massive layoffs at eBay, a company that currently employs over 10,000 people worldwide.
As Reuters point out, this is both an unusual and very risky deal:
A potential deal would upend the usual M&A playbook, as it is rare for a company to target one nearly four times its size. Such deals typically rely on heavy debt, stock issuance, or both - banking on future earnings of the combined company to justify the cost.
Cohen said he has lined up financial commitments, including a commitment letter for about $20 billion in debt from TD Bank, and may seek backing from external investors including Middle Eastern sovereign-wealth funds to fund the deal.
In other words, the deal would saddle the company with enormous amounts of debt, and seems reliant on a source of finance that, as we’ve literally only just discussed, is very much starting to dry up.
If you’re wondering why GameStop would bother, you might find the answer in the fact that CEO Ryan Cohen, who publicly claims he currently receives no compensation for his role, will be paid $35 billion if he can get the company’s value to $100 billion, a moonshot that a deal like this seems specifically tailored towards.
I have no love for eBay–the fees they took out of my last overseas sale were bordering on a crime–but as far as the platform has fallen since its 2000's heyday, seeing it be leveraged into a turbocapitalist's desperate gamble for a billionaire payoff would be pretty gross even by 2026’s depraved standards.
